The Leadership Style Role in Organisation


The past few decades have experienced an increment in the degree of complexity within the business environment. An example of such complexity relates to increment in the intensity of competition due to the high rate of globalization (Clegg, Kornberger & Pitsis 2011). Consumers have also become highly knowledgeable with regard to their rights, and to survive in such an environment, it has become paramount for businesses to enhance their competitive advantage. Businesses are also faced with the task of developing firm-level sustainability in addition to ensuring that they create a strong relationship with various stakeholders (Stubbs & Cocklin 2008). Taking into account, these elements would significantly nurture customer trust and thus promote business success.

Scholars reveal different ways through which organizations can develop customer trust. One of these entails the promotion of ethical behaviors within an organization because behaviors perpetrated by organizations affect consumers daily. The effects of these behaviors are either positive or negative. Some of the negative effects include environmental pollution and abuse of consumer rights. The legal environment has provided grounds to deal with the negative effects. However, in some instances, the law is considered as an ineffective tool with regard to its enforcement (Knights & Wilmott 2007).

Given the unparalleled increase of knowledge in contemporary society, consumers are increasingly calling upon organizations to ensure that their employees behave ethically. Northam (2005) asserts that organizational ethics cannot be achieved without proper leadership. This paper aims at examining whether the leadership style adopted by an organization can have a significant influence on the employees’ ethical behaviors. The paper seeks to achieve this objective by evaluating how the various leadership styles influence employee ethics. Some of the leadership styles taken into account include transformational, transactional, democratic, autocratic, and laissez-faire leadership styles.

How leadership style affects employee ethical behavior

Organizational behavior

In their operation, organizations are composed of individuals whose behaviors are controlled and regulated by the management in order to achieve a collective purpose. Employees have the responsibility of working together in order to achieve predetermined goals. However, to achieve this objective, it is paramount for organizational leaders to minimize and eliminate unpredictable behavior. One of the ways through which organizations attempt to control employee behavior within the workplace is by formulating rules, procedures, and codes of ethics amongst other cultural and bureaucratic strategies (Knights & Wilmott 2007). According to Schwartz (2000), the integration of ethical codes plays an effective role in promoting ethics. However, some employees might develop a perception that they are being coerced and thus fail to adhere to the instituted codes of ethics.

However, incorporation of these strategies tends to squeeze in ethical responsibility amongst the employees. Therefore, it has become crucial for organizations to integrate the concept of ethical leadership to deal with the challenge presented by dissent employees. According to Brown and Trevino (2006), ethical leadership takes into account various issues such as interactional fairness, trust, honesty, and idealized influence on the followers. On the other hand, ethical leadership should be free from abusive supervision. The adoption of an effective leadership style can significantly influence the employees’ perception of their leaders. Ethical leaders tend to portray a high degree of effectiveness with regard to decision-making. Additionally, ethical leaders tend to incorporate an effective internal communication mechanism in an effort to influence employees’ ethics. They also formulate clear ethical standards that employees are required to follow.

Leadership refers to the process through which one engages and influences individuals in an effort to attain predetermined goals. On the other hand, ethics refers to what is right or wrong. There is a relatively high degree of correlation between leadership and ethics. The unifying factor between the two elements runs deep in the context of power. One must have the power to exercise leadership. On the other hand, ethics require power for proper implementation, and this aspect arises from the fact that individuals must possess a certain amount of power in order to undertake a certain act (Northam 2005).

According to Bolden and Gosling (2006), the world and specifically organizations are in a dire need of effective leaders who adhere to high ethical standards. As a result, it has become paramount for organisations to consider reviewing their leadership styles in order to be competitive (Sheraz, Zaheer, Rehman & Nadeem 2011). Schminke (2010) asserts that leaders’ moral values have a direct influence on the overall value structure of an organisation. Therefore, leaders are critical in shaping ethics within a particular entity.

Organisational leaders carry the responsibility of integrating sound ethical standards, which can inspire employees to follow and pursue a given goal. Previous theories and researches stipulate that it is necessary for leaders to influence ethics in organisations (Kidwell & Martin 2008). Organisations can adopt various leadership styles, and this aspect gives organisational leaders the freedom to choose the kind of leadership style that fits well in their organisations. Some of the leadership styles adopted by organisations include bureaucratic leadership, transformational leadership, and transactional leadership.

Transformational leadership

According to Schminke (2010), transformational leadership refers to the process through which leaders engage their followers in such a level that they positively influence their followers’ level of morality and motivation. Organisational leaders are supposed to be champions in that they should support employees in their effort to achieve organisational and departmental goals. Sheraz et al. (2011) assert that effective leaders have transformational characteristics and such leaders motivate their employees in a number of ways such as leading by example and by living their professional and personal lives ethically.

Schminke (2010, p.98) asserts that for leaders to influence their follower’s ethics positively, they should themselves be credible role models. Employees must develop a strong belief that they can depend on their leaders for direction. By holding positions of power, leaders tend to possess some credibility. However, the leaders’ credence can only be established based on trustworthiness, principles, and decision-making abilities. In addition, credibility lies in whether leaders can positively influence employees’ ethics and minimise unethical behaviours amongst employees (Schminke 2010). Scholars and researchers have identified three main factors stimulate employee leadership, viz. benevolence, integrity, and ability.

Transformational leadership style is mainly concerned with intellectual stimulation, idealised influence, inspirational motivation, behaviour, and personalised considerations (Sheraz et al. 2011). According to Kidwell and Martin (2008), transformational leaders persuade their followers to integrate high moral values in their lives and work. Consequently, followers become cognisant of the value and importance of attaining designated outcomes. By incorporating this type of leadership, organisational leaders make their followers transcend their self-interests coupled with becoming more focused on team and organisational goals. Therefore, one can conclude that transformational leadership is remarkably effective in instilling ethics amongst the employees. Due to their idealised influence, transformational leaders encourage employees to act collectively for the benefit of the entire organisation rather than individual benefit. This means that any form of self-interest in the employees’ actions should be avoided if one is to live to the true spirit of transformational leadership.

Transformational leadership also play a critical role in ensuring that employees carry out their duties in an ethical manner. One of the ways through which this aspect is achieved is by promoting employees’ moral development. Additionally, transformational leadership also motivates employees to internalise the various moral values that are exemplified by their leaders. Therefore, one can assert that one of the foundations of transformational leadership is nurturing moral principles such as integrity. Transformational leadership also takes into account social responsibility and employee empowerment. This move culminates in an increment in self-efficacy amongst the employees (Herman 2007).

For employees to act ethically, it is paramount for them to have a vision for the future. This assertion arises from the fact that having a vision motivates employees to act ethically. Transformational leaders develop a high level of optimism amongst the employees because of their inspirational nature (Parker 2002). Additionally, this leadership style stimulates employees to act ethically by helping them in their personal identification. Employees can identify themselves with their leaders. In their leadership, transformational leaders can establish a link between the employees’ self-concept and the organisation’s mission successfully (Kidwell & Martin 2008).

Transformational leadership comes with numerous benefits. Kidwell and Martin (2008) are of the opinion that this leadership style contributes towards a high level of employee satisfaction. For example, employees are satisfied with their leaders and work. Transformational leaders pursue employees’ professional and personal growth and thus employees experience soaring levels of motivation and enthusiasm in work and life. Additionally, transformational leadership contributes to a high level of organisational commitment.

Adoption of transformational leadership is particularly effective in developing strong corporate culture (Ferrell, p.134). This objective is attained by ensuring that employees understand organisational mission. Developing an effective organisational culture can contribute towards the establishment of ethical practices amongst employees because the established culture will result in the creation of organisational norms that will guide employees in executing their duties. Transformational leaders also inspire employees to adopt new ways of thinking, which culminates in new learning experiences.

Transactional leadership

According to Schminke (2010), transactional leadership is a type of leadership where leaders are concerned with engaging the followers with the objective of establishing a link that contributes towards enhancement of the employees’ morality and motivational levels. Transactional leadership style hinges mainly on punishments and rewards directed towards the followers. Employees receive rewards if their actions meet a pre-determined and mutually understood goal. This leadership style takes into account the moral aspect of the followers in an effort to enable them attain their fullest potential.

Kidwell and Martin (2008) are of the opinion that transactional leaders are mainly concerned with their status quo rather than their followers’ needs. Transactional leaders’ personal achievements and power are the main sources of motivation for these leaders. Additionally, transformational leaders tend to incorporate Management-by-Exception concept in executing their duties, which means that they usually exercise evasion of corrective actions.

Incorporation of optimal cultural factors, such as an effective reward system and fair treatment to employees in addition to being employee-focused, contributes towards the creation of excellent ethics-related behaviours and attitudes amongst employees. One of the way through which transactional leadership achieves this goal is by establishing a number of exchanges between the employees and the leaders. If the employees achieve the predetermined goal, they might get rewards in the form of salary increments or promotions (Schminke 2010). Unfortunately, these rewards are only possibilities and no one is guaranteed of the same.

The leadership style adopted by an organisation also influences employees’ behaviours through the various systems incorporated in the process. One of these systems relates to reward and punishment systems adopted. According to Schminke (2010), leadership style can be used to influence and reinforce desired behaviour within an organisation. Leaders motivate employees to behave in an ethical manner by ensuring that employees get fair rewards whenever they abide to a given rule. On the other hand, the punishment system communicates what employees should desist from doing in day-to-day activities.

Autocratic leadership

This form of leadership style closely relates to transactional leadership because autocratic leaders possess absolute power over their followers. One of the greatest challenges faced by employees in an autocratic institution that they do not have the opportunity of participating in leadership. This arises from the fact that they cannot share their opinion with the top management. Autocratic leadership is one of the worst forms of leadership, and it encourages rebellion and dissidence because employees cannot voice their concerns no matter how genuine they might be.

Adopting autocratic leadership can contribute towards development of ethical organisational behaviours because of its fast decision making nature. This element arises from the fact that organisational leaders ensure that their followers focus on attainment of their tasks and the organisation’s mission.

However, the negative side of this leadership style arises from the fact that it fails in nurturing a strong relationship between employees and management. According to Brown and Trevino (2006), this leadership style may result to development of unethical organisational behaviours such as a high rate of absenteeism. Therefore, one can conclude that some type of leadership styles such as autocratic leadership can promote a certain degree of unethical practices.

Democratic leadership

This leadership style seeks to develop a working environment whereby the employees get support and encouragement to aspire towards ethical morality and rationality. By adopting this leadership style, organisations enhance high levels of ethical behaviours amongst employees because employees are given an opportunity to participate in the running of the organisation, for example through participating in the decision-making process. Adoption of democratic leadership style plays a pivotal role with regard to the elimination of fantasies that employees may possess regarding their leaders. Yiannis (1997) asserts that employees may perceive their leaders as deities, which would have adverse effects on the executive-subordinate relationship.

By ensuring that employees participate in crucial decision-making processes, organisational leaders influence the employees to support implementation of the decisions. This means that possible employee resistance is eliminated (Jackall 2010). Employee resistance with regard to incorporation of certain measures can lead to the emergence of unethical practices. Adoption of democratic leadership style also contributes towards development of ethical behaviours amongst the employees because employees develop a feeling of being in control of their career success. This means that the employees do not base their satisfaction on financial rewards and therefore they tend to shun unethical behaviours.

According to Woods (2005), democratic leadership contributes towards the creation of an environment whereby the employees become empowered. This leadership style motivates employees towards attainment of their human potential. In order to succeed in their desire for growth, democratic leadership style requires employees to observe high level of ethical behaviours. Additionally, democratic leadership can influence employees’ ethical behaviour by establishing effective cultural, social, and institutional structures. One of the ways through which this objective is achieved is by ensuring that employees respect diversity within the organisation. According to Knights and Wilmott (2007), democratic leadership enables employees to be more conscious and respect their colleagues’ dignity and autonomy. This element forms the grounds for employees to reason and act ethically. Consequently, the probability of internal organisational conflicts based on differences in race, age, gender, culture, language, religion and nationality amongst other dimensions of diversity is eliminated. This culminates in the creation of a symbiotic working relationship (Woods 2005).

Laissez-faire leadership style

This type of leadership entails a style whereby the employees are given the discretion to work on their own. For example, employees are free to set their own time limit with regard to execution of a certain project. However, team leaders provide employees with the necessary support such advice and resources. In most cases, leaders who have adopted this leadership style do not micro-manage employees’ activities. This type of leadership can be truly effective in influencing employees’ ethical behaviours for the leaders constantly monitor the employees’ actions, in addition to giving them feedback on their performance. Adoption of this leadership style significantly increases the employees’ level of satisfaction in executing their duties. Therefore, the probability of employees adhering to ethical organisational behaviour increases significantly.


The above analysis has shown that there is a strong direct correlation between the leadership style adopted in an organisation and employee behaviours, because leaders hold positions of power and hence have a high probability of influencing employees’ ethics. Proper communication is one of the ways through which leaders can influence employee behaviour. Leaders’ verbal and non-verbal communication substantially determines the ethical direction taken by their followers. In executing their leadership roles, leaders are required to be role models. This means that they have to incorporate best leadership practices such as honesty, trust, and fairness in order to influence employees positively. By adopting transformational leadership, organisational leaders nurture high level of ethics amongst employees because such leaders promote moral principles such as integrity, accountability, and benevolence. Employees also become focused on collective benefits rather than being motivated by self-interest.

Transactional leadership also promotes ethical behaviours amongst employees through the reward and punishment system. With regard to rewards, employees work towards attainment of organisational goals in order to receive rewards like promotions. On the other hand, the punishment system compels employees to desist from unethical practices. Laissez-faire and democratic leadership styles also play a decisive role in promoting ethical standards amongst employees by providing employees with freedom in executing their duties. This aspect increases the probability of employee empowerment, which culminates in job satisfaction. Satisfied employees are unlikely to engage in unethical practices. Other leadership styles such as autocratic leadership can promote unethical practices because employees’ freedom is curtailed under such retrogressive leadership styles. In summary, one can assert that leadership style can influence ethical behaviours in an organisation either positively or negatively.

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